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LIPPO Malls Indonesia Retail Trust (LMIR Trust) has entered into an agreement with its sponsor, PT Lippo Karawaci Tbk, to acquire two income-producing retail malls in Indonesia for S$98.1 million.
These include the S$61.1 million purchase of Lippo Plaza Jogja (LPJ), part of an integrated development with an adjoining hospital and the S$37 million purchase of Kediri Town Square, a two-storey retail mall in Kediri city, East Java.
The considerations are at a respective 2.1 per cent and 3.6 per cent discount to the average of two independent valuations.
On a pro forma basis for the year ended Dec 31, 2016, these transactions will boost LMIR Trust's net property income by S$7.6 million or 4.4 per cent and distribution per unit (DPU) to 3.43 Singapore cents from 3.41 Singapore cents. This will lift DPU yield to 9.27 per cent from 9.22 per cent, based on the closing price on Dec 31, 2016.
Both acquisitions will be financed via proceeds from the issuance of bonds and/or debt financing facilities from banks and partially by internal cash.
Chan Lie Leng, CEO of the Reit manager, said: "Both properties are strategically located with recognisable local and international brands to serve the needs of the local communities and tourists. With LPJ being our first mall in Yogyakarta, these acquisitions will further diversify our portfolio geographically across Indonesia as well as improve the diversification of our tenant base, thereby reducing tenant and asset concentration risks within LMIR Trust's enlarged portfolio."
With the proposed acquisitions and the recently acquired Lippo Plaza Kendari, LMIR Trust would have acquired three properties this year. It has a pipeline of more than 40 retail malls from its sponsor for which it has right-of-first-refusal to acquire them.